Outokumpu's second quarter 2008 interim report ...

Stock exchange release
July 24, 2008 at 1.00 pm
Second quarter highlights

- Operating profit totaled EUR 174 million
- Good net cash flow of EUR 103 million from operating activities.
- Weaker stainless steel markets as distribution sector postpone
purchases due to the nickel price decline and
demand from some end-use segments is softer.
- Small and gradual base price increases achieved during the
beginning of the quarter, decline in base prices started in
June.
- Production below full capacity due to weaker demand and maintenance
breaks in Tornio, stainless deliveries totaled
391 000 tons.
- Investment decision of EUR 420 million to expand ferrochrome
production at Tornio, Finland.


Group key figures
                                           II/08   I/08 II/07  2007
Sales                         EUR million  1 549  1 689 2 092 6 913
Operating profit              EUR million    174    100   406   589
Non-recurring items
in operating profit           EUR million      -      -    25    14
Profit before taxes           EUR million    166     80   652   798
Non-recurring items
in financial income
and expenses                  EUR million      -    -12   252   252
Net profit for the period
from continuing operations    EUR million    130     61   553   660
Net profit for the period     EUR million     56     63   565   641
Earnings per share
from continuing operations            EUR   0.72   0.34  3.04  3.63
Earnings per share                    EUR   0.31   0.35  3.11  3.52
Return on capital employed              %   17.2   10.0  35.5  13.9
Net cash generated from
operating activities          EUR million    103    107   132   676
Capital expenditure,
continuing operations         EUR million     56     41    75   190
Net interest-bearing debt
at end of period              EUR million    939    737 1 119   788
Debt-to-equity ratio at
end of period                           %   29.1   23.3  30.8  23.6
Stainless steel deliveries     1 000 tons    391    449   399 1 419
Stainless steel
base price 1)                     EUR/ton  1 307  1 243 1 518 1 304
Personnel at the
end of period,
continuing operations 2)                   8 884  8 137 8 783 8 108

1) Stainless steel: CRU - German base price (2 mm cold rolled 304
sheet).
Please note: Between July - October 2007, European prices for some
stainless grades were quoted on a transaction price basis,
therefore
base prices are the calculated value of transaction price minus
alloy
surcharge for this time period (CRU).
2) End-June figures include summer trainees.

SHORT-TERM OUTLOOK

Underlying demand for stainless steel from most end-use segments is
stable. As a result of the increasing uncertainty related to the
global economic turmoil, some weakness is evident in consumer-driven
segments such as white goods and construction. Demand from
investment-driven segments continue generally healthy but some
projects have been postponed because of the economic uncertainties.

Distributors are currently postponing their purchases because of the
decline in the nickel price and the holiday period in Europe.
Inventory levels for standard grades by distributors are at normal
levels or somewhat higher. Outokumpu is now selling standard grades
for deliveries in August and September.

The slowdown of demand during the holiday season and annual
maintenance breaks at the Group's mills as well as the postponement
of purchases by distributors will clearly reduce stainless delivery
volumes for the third quarter compared to the second quarter.

The current market conditions suggest that there is price pressure up
to EUR 100-150/ton for the average base price of the German 2mm cold
rolled 304 stainless steel sheet in the third quarter compared to the
second quarter.

Outokumpu's operating profit for the third quarter of 2008 is
expected to be negative including some EUR 100 million of
nickel-related inventory losses at current nickel prices. Underlying
operational result is expected to be slightly positive depending on
delivery volumes.

CEO Juha Rantanen:

"At the end of the second quarter stainless markets turned softer due
to seasonality and declining nickel price. There are, however, good
prospects for the distributor markets to improve during this fall:
the inventories are normal, imports to Europe are moderate and nickel
price has come down substantially from its historical highs.
Additionally, most end-use segments are stable. Outokumpu's position
in the market is good thanks to Tornio's cost competitiveness and the
strength of our specialties business. Our strategy will bring further
stability and better profitability in the years to come."

The attachments present Management analysis of the second quarter
operating result and the Interim review by the Board of Directors for
January-June 2008, the accounts and notes to the interim accounts.
This interim report is unaudited.

For further information please contact:

Päivi Lindqvist, SVP - Communications and IR
tel. [phone], mobile [phone]
[e-mail]

Ingela Ulfves, VP - Investor Relations and Financial Communications
tel: + 358 9 421 2438, mobile [phone]
[e-mail]

Esa Lager, CFO
tel: [phone]
[e-mail]


News conference and live web-cast today at 3.00 pm.

A combined news conference, conference call and live webcast
concerning the second-quarter 2008 financial results will be held on
July 24, 2008 at 3.00 pm Finnish time (8.00 am US EST, 1.00 pm UK
time, 2.00 pm CET) at Hotel Kämp, conference room Akseli
Gallen-Kallela, Pohjoisesplanadi 29, 00100 Helsinki, Finland.

To participate via a conference call, please dial in 5-10 minutes
before the beginning of the event:
UK [phone]
US & Canada [phone]
Password Outokumpu

The news conference can be viewed live via Internet at
www.outokumpu.com.
Stock exchange release and presentation material will be available
before the news conference at www.outokumpu.com -> Investors ->
Downloads

An on-demand web-cast of the news conference will be available at
www.outokumpu.com as of July 24, 2008 after 6.00 pm.

An instant replay service of the conference call will be available
until Monday July 28, 2008 on the following numbers:

UK replay number [phone], access code: 800067
US & Canada replay number [phone], access code: 800067

OUTOKUMPU OYJ
Corporate Management

Ingela Ulfves
Vice President - Investor Relations & Financial Communications
tel. + 358 9 421 2438, mobile [phone]
e-mail: [e-mail]

MANAGEMENT ANALYSIS - SECOND QUARTER OPERATING RESULT


Group key figures

EUR million                       I/07  II/07 III/07  IV/07   2007
Sales
General Stainless                1 700  1 670    879  1 073  5 321
Specialty Stainless              1 003  1 028    687    738  3 456
Other operations                    64     63     53     57    237
Intra-group sales                 -638   -669   -391   -403 -2 101
The Group                        2 129  2 092  1 227  1 465  6 913

Operating profit
General Stainless                  245    188   -224     11    220
Specialty Stainless                182    196    -51      9    337
Other operations                     1     19      8     -6     21
Intra-group items                   -4      2     11      2     11
The Group                          424    406   -256     15    589

EUR million                       I/08  II/08
Sales
General Stainless                1 304  1 222
Specialty Stainless                786    778
Other operations                    64     63
Intra-group sales                 -465   -514
The Group                        1 689  1 549

Operating profit
General Stainless                   81    125
Specialty Stainless                 42     44
Other operations                   -20      4
Intra-group items                   -3      1
The Group                          100    174

Stainless steel
deliveries

1 000 tons                        I/07  II/07 III/07  IV/07   2007
Cold rolled                        220    186    117    180    703
White hot strip                     94     94     49     78    314
Quarto plate                        39     41     30     36    146
Tubular products                    20     17     13     15     65
Long products                       16     15     10     12     54
Semi-finished
products                            40     46     21     31    137
Total deliveries                   430    399    238    352  1 419

1 000 tons                        I/08  II/08
Cold rolled                        228    192
White hot strip                    120     94
Quarto plate                        33     35
Tubular products                    19     19
Long products                       15     15
Semi-finished
products                            34     35
Total deliveries                   449    391

Market prices and
exchange rates  (average)

                                  I/07  II/07 III/07  IV/07   2007
Market prices 1)
Stainless steel
  Base price          EUR/t      1 930  1 518    710  1 058  1 304
  Alloy surcharge     EUR/t      2 277  2 913  2 967  1 939  2 524
  Transaction price   EUR/t      4 207  4 432  3 677  2 997  3 828

Nickel                USD/t     41 440 48 055 30 205 29 219 37 230
                      EUR/t     31 619 35 646 21 983 20 175 27 161
Ferrochrome
(Cr-content)          USD/lb      0.77   0.82   1.00   1.05   0.91
                      EUR/kg      1.30   1.34   1.60   1.60   1.46
Molybdenum            USD/lb     26.69  30.97  31.97  32.66  30.57
                      EUR/kg     44.90  50.65  51.30  49.71  49.17
Recycled steel        USD/t        278    287    271    283    280
                      EUR/t        212    213    197    195    204

Exchange rates
EUR/USD                          1.311  1.348  1.374  1.448  1.371
EUR/SEK                          9.189  9.257  9.264  9.288  9.250
EUR/GBP                          0.671  0.679  0.680  0.708  0.684

                                  I/08  II/08
Market prices 1)
Stainless steel
  Base price          EUR/t      1 243  1 307
  Alloy surcharge     EUR/t      1 702  1 888
  Transaction price   EUR/t      2 945  3 195

Nickel                USD/t     28 957 25 682
                      EUR/t     19 335 16 440
Ferrochrome
(Cr-content)          USD/lb      1.21   1.92
                      EUR/kg      1.78   2.71
Molybdenum            USD/lb     33.81  33.40
                      EUR/kg     49.77  47.14
Recycled steel        USD/t        393    565
                      EUR/t        262    361

Exchange rates
EUR/USD                          1.498  1.562
EUR/SEK                          9.400  9.352
EUR/GBP                          0.757  0.793
1) Sources of market prices:
Stainless steel: CRU - German base price, alloy surcharge and
transaction price (2 mm cold rolled 304 sheet), estimates for
deliveries during the period.
Please note: Between July-October 2007, European prices for some
stainless grades were quoted on a transaction price basis,
therefore base prices are the calculated value of transaction
price minus alloy surcharge for this time period (CRU).
Nickel: London Metal Exchange (LME) cash quotation
Ferrochrome: Metal Bulletin - Ferrochrome lumpy chrome charge,
basis 52% chrome
Molybdenum: Metal Bulletin - Molybdenum oxide - Europe
Recycled steel: Metal Bulletin - Steel scrap HMS 1&2 fob Rotterdam



Softening demand for stainless steel in Europe

Global growth in demand for stainless steel slowed towards the end of
the second quarter and markets moved to oversupply. The quarter's
apparent consumption of stainless steel is estimated to have remained
almost flat in Europe and globally compared to I/2008. Market
conditions were weaker in both Europe and Asia. In the US, demand for
stainless continued to be at a low level.

Global production of stainless steel increased by some 2% compared to
the first quarter despite strong production cuts in Asia, especially
in China. As a result of the decline in the nickel price, buyers
started postponing their stainless purchases in expectation of lower
transaction prices. Uncertainty about the global economic situation
also affected buyer behavior. Demand softened especially in
consumer-driven segments, such as construction and white goods.

At the beginning of the second quarter, stainless prices were on a
rising trend and the base price for 2mm cold rolled 304 stainless
steel sheet in Germany increased to more than 1 300 EUR/ton. As a
result of softening demand, base prices began to decline towards the
end of the quarter. The base price was 1 275 EUR/ton at the end of
June. The average base price in the second quarter was 1 307 EUR/ton
(I/2008: 1 243 EUR/ton). Mainly as a result of the increase in the
ferrochrome price, the average alloy surcharge for the second quarter
increased to 1 888 EUR/ton (I/2008: 1 702 EUR/ton). The average
transaction price in the period was 3 195 EUR/ton (I/2008: 2 945
EUR/ton). (CRU)

Among alloying materials, the price of nickel declined from around 31
000 USD/ton to less than 22 000 USD/ton and the average price of
nickel was 25 682 USD/ton in II/2008 (I/2008: 28 957 USD/ton).
Ferrochrome markets remained tight in the review period because of
uncertainty related to South African supply. The quarterly contract
price for ferrochrome for the second quarter was 1.92 USD/lb, up by
59% from I/2008. The quarterly contract price for the third quarter
has been preliminary settled at 2.05 USD/lb. The average price of
molybdenum was mainly unchanged at 33.40 USD/lb. The price of
recycled steel increased to 565 USD/ton, 43% up on I/2008.

Operating profit improved with lower delivery volumes

Group sales in the second quarter totaled EUR 1 549 million, 8% down
on I/2008.  Production was below full capacity and stainless steel
deliveries were down by 13% to 391 000 (I/2008: 449 000 tons). Main
reasons for the lower level of deliveries were weakening demand
towards the end of the quarter and maintenance breaks at Tornio Works
in April.

Operating profit improved to EUR 174 million (I/2008: EUR 100
million) and included net raw material-related inventory gains of
some EUR 20 million (I/2008: loss of some EUR 60 million). The main
reasons for the profit improvement were inventory losses turning into
gains, a higher ferrochrome price, higher base prices and an improved
product mix compared to the first quarter. Lower deliveries had a
negative impact on operating profit.

Return on capital employed was 17.2% (I/2008: 10.0%). Earnings per
share totaled EUR 0.31 (I/2008: EUR 0.35) and earnings per share from
continuing operations totaled EUR 0.72 (I/2008: EUR 0.34).

Sales by General Stainless in the second quarter totaled EUR 1 222
million (I/2008: EUR 1 304 million) and deliveries totaled 359 000
tons, down by 10% on I/2008. Operating profit rose by 54% to EUR 125
million (I/2008: EUR 81 million) of which Tornio Works posted EUR 114
million (I/2008: 67 million). The higher ferrochrome price had a
clearly positive impact on Tornio Works' operating profit.

Sales by Specialty Stainless totaled EUR 778 million (I/2008: EUR 786
million) and deliveries were down by 5% to 153 000 tons (I/2008: 161
000 tons). Operating profit was stable at EUR 44 million (I/2008: EUR
42 million).

Operating profit by Other operations was EUR 4 million (I/2008: EUR
20 million loss).

Investment projects

Outokumpu will expand the Group's ferrochrome production capacity in
Tornio, Finland by an investment totaling some EUR 420 million. This
investment will double the plant's annual capacity to 530 000 tons
and the additional capacity is scheduled to be available during the
first quarter of 2011. The expansion of ferrochrome capacity will
make Outokumpu comfortably self-sufficient in its primary chromium
needs. The investment will support Outokumpu's strategy realization,
maintain cost leadership, secure the sourcing of raw materials and
capitalize on the Group's own chromium mine in Kemi.

Outokumpu is investing some EUR 10 million in Long Products'
finishing facilities in Sheffield in the UK. The new equipment is
scheduled to be operational in mid 2009. The investment creates an
integrated manufacturing route for small bar and rebar complementing
the existing melt shop and the wire rod mill, both in Sheffield.

Due to delays in land purchasing, the start-up of the service center
in Poland has been rescheduled from planned end of 2008 until the end
of 2009.

The coil service center being built in India is to be expanded from
the original plan to become a combined coil and plate service-center,
first of its kind in India. This service center is expected to be
operational in the first quarter of 2010.

Additional capital expenditure for all service center investments
(France, Germany, Poland, India and China) of EUR 60 million has been
approved as a result of changes in scope and increasing costs (mainly
related to construction and equipment purchase). As a result, capital
expenditure for service center network expansion, excluding the
acquisition of the Italian distributor SoGePar, will total
approximately EUR 220 million.

The feasibility study on building a cold rolling mill in India has
been finalized. Outokumpu has decided not to proceed with the
investment at this point. Other options for strengthening Outokumpu's
presence in the growing Indian market are currently being explored.

Acquisitions and divestments

In April, Outokumpu signed an agreement to acquire the SoGePar Group,
an Italian distributor of stainless steel from the Borromeo family,
its current owners. Outokumpu will pay EUR 215 million in cash and
take on company debt totaling some EUR 120 million. Details on the
transaction were filed with the EU Commission on June 19, 2008 and
the acquisition is expected to be closed by the end of July 2008. The
total consideration is subject to final review once the closing
balance sheet, expected by the end of the third quarter, has been
approved.

SoGePar operates stainless steel service centers in Castelleone in
Italy and in Rotherham in the UK. SoGePar also has stock operations
in Italy, the UK, Belgium, Finland, France and Ireland, as well as a
commercial office in Germany and a representative office in Turkey.
Sales by the SoGePar Group in 2007 totaled EUR 560 million, with an
operating profit of EUR 44 million and deliveries totaling 134 000
tons.

In June, Outokumpu signed an agreement to acquire the operations of
Avesta Klippcenter AB in Avesta, Sweden. Transfer of ownership in
connection with this transaction took place on July 1, 2008.

Discontinued operations

In April, Outokumpu signed an agreement whereby the Group's remaining
copper tube assets were sold to Cupori Group Oy. This transaction was
closed on June 3, 2008 and Outokumpu received EUR 56 million as
consideration for the sale. A capital loss of EUR 66 million was
booked on this transaction in the second quarter. Both these figures
are subject to final review once the closing balance sheet, expected
by the end of the third quarter of 2008, has been approved.

The transaction has no effect on either Group sales or operating
profit as the business in question has been reported as a
discontinued operation in Outokumpu's accounts. In the income
statement, the capital loss on the transaction is included in "Net
profit from discontinued operations".

Assets divested comprise the copper plumbing installation and
industrial tube manufacturing companies in Pori (Finland), Zaratamo
(Spain), Västerås (Sweden) and Liège (Belgium), as well as copper
tube sales companies in France, Germany and Italy. In 2007, these
businesses generated sales totaling EUR 510 million, a net loss of
EUR 5 million and employed 730 personnel.

The remaining part of the Group's Copper Tube and Brass business
consists of brass rod business. The brass rod plant is located in
Drünen in The Netherlands and the unit also has a 50% stake in a
brass rod company in Gusum, Sweden. Outokumpu Brass employs some 170
personnel. It is Outokumpu's intention to also divest its brass rod
business.

Events after the period

In July, Outokumpu signed a deal with Vattenfall relating to
electricity deliveries in Finland and Sweden totaling some fifteen
terawatt hours (TWh) over a ten-year period. In addition to these
extensive deliveries of electrical power, Vattenfall and Outokumpu
also agreed on electricity portfolio management services to be
provided by Vattenfall, as well as on co-operation to achieve
improved efficiency in the use of energy.
Outokumpu is currently expanding its stainless steel operations in
Finland and Sweden and this has generated a need for additional
electricity supply. This deal with Vattenfall covers an important
share of the Group's electricity needs until the possible Fennovoima
nuclear project will start delivering.
INTERIM REVIEW BY THE BOARD OF DIRECTORS JANUARY - JUNE 2008
(Unaudited)

Demand for stainless steel at a good level

Demand for stainless steel was at a good level during the first half
of 2008. However, after a solid first quarter, demand for stainless
steel weakened during the second quarter as the global economic
growth slowed down in all regions, except China, where the national
economy grew by some 9%. The price of nickel price started to
decline, and distributors began postponing their orders. Compared to
the very strong first half of 2007, demand for stainless steel was
significantly lower in the second quarter. Compared to 2007, apparent
consumption of stainless steel decreased in Europe by 8% and globally
by 2%. The average German base price for 2mm 304 cold rolled sheet
was 1 275 EUR/ton in I-II/2008, 37% lower than in I-II/2007. The
transaction price for stainless steel averaged 3 070 EUR/ton in
I-II/2008 and was 29% lower than in I-II/2007. (CRU)
Good operating profit

Group sales in the first half of 2008 declined by 23% to EUR 3 238
million (I-II/2007: EUR 4 221 million) due to lower transaction
prices. Stainless steel deliveries were higher at 840 000 tons
(I-II/2007: 829 000 tons).

Operating profit for the first half of 2008 totaled EUR 274 million
(I-II/2007: EUR 830 million), significantly lower than in the
corresponding period of 2007. Primary reasons for the decline in
operating profit were the significantly higher base prices in 2007
and nickel-related inventory gains of some EUR 100 million in
I-II/2007 compared to losses of some EUR 40 million in I-II/2008.
Profit before taxes totaled EUR 247 million (I-II/2007: EUR 1 068
million).

Net financial income and expenses in the first six months of 2008
were EUR 16 million negative
excluding non-recurring items (I-II/2007: EUR 20 million negative
excluding non-recurring gains). In I/2008, an impairment loss of EUR
12 million was booked in other financial expenses due to the decline
in the share price of Belvedere Resources Ltd, classified as
available-for-sale financial asset. Financial income in 2007 included
a EUR 142 million non-recurring gain from the sale of the remaining
12% holding in Outotec Oyj and a EUR 110 million non-recurring gain
from the Talvivaara transaction. Net profit for the period from
continuing operations totaled EUR 191 million (I-II/2007: EUR 864
million). Earnings per share totaled EUR 0.66 (I-II/2007: EUR 4.80)
and earnings per share from continuing operations totaled EUR 1.06
(I-II/2007: EUR 4.75). The return on capital employed for I-II/2008
was 13.2% (I-II/2007: 36.4%).

Net cash generated from operating activities totaled EUR 209 million
(I-II/2007: EUR 217 million). Net interest-bearing debt totaled EUR
939 million at the end of June (June 30, 2007: EUR 1 119 million).
Outokumpu's gearing at the end of June was 29.1% (June 30, 2007:
30.8%).
Investment projects

Capital expenditure for the first half of 2008 totaled EUR 97 million
(I-II/2007: EUR 101 million). The new investment projects approved
for 2008-2011 are detailed below.

In January, a decision was made to invest EUR 370 million over three
years to broaden the product range of Tornio Works. Outokumpu will
start producing high-quality ultra-clean ferritic stainless steel
grades, as well as bright-annealed austenitic and ferritic stainless
products. This investment, together with the on-going replacement of
the No. 2 annealing and pickling line, will increase Tornio Works'
total installed capacity for finished products by 100 000 tons to
some 1.3 million tons by the end of 2010. The investment also
includes a service center (from 2010-) located near Stuttgart in
Southern Germany which will have an annual processing capacity of 60
000 tons especially for bright-annealed austenitic and ferritic
products.

In February, Outokumpu decided to expand and relocate its stock and
processing capability in central France by investing some EUR 14
million over a two-years period. Combined annual coil and plate
processing capacity in standard and special stainless steel grades
will be 40 000 tons and is scheduled to be in place by the end of
2009.

In February, Outokumpu OSTP and the Saudi Arabian tube manufacturer
Armetal, a company of Al-Hejailan Group, agreed to form Outokumpu
Armetal Stainless Pipe Co., Ltd., a 51/49 stainless steel tubular
joint venture, in Riyadh.

In June, Outokumpu's Board of Directors approved plans to expand the
Group's ferrochrome production capacity in Tornio, Finland. This EUR
420 million investment will double the plant's annual capacity to 530
000 tons and the additional capacity is scheduled to be available
during the first quarter of 2011. The expansion of ferrochrome
capacity will make Outokumpu comfortably self-sufficient in its
primary chromium needs. The investment will support Outokumpu's
strategy realization, maintain cost leadership, secure the sourcing
of raw materials and capitalize on the Group's own chromium mine in
Kemi.

In June, Outokumpu announced an investment of some EUR 10 million in
Long Products' finishing facilities in Sheffield in the UK. The new
equipment is scheduled to be in operational in mid 2009. This
investment creates an integrated manufacturing route for small bar
and rebar complementing the existing melt shop and wire rod mill,
both in Sheffield.

Due to delays in land purchasing, start-up of the service center in
Poland has been rescheduled from the end of 2008 to the end of 2009.

The coil service center being built in India is to be expanded from
the original plan to become a combined coil and plate service center,
first of its kind in India. This service center is expected to be
operational in the first quarter of 2010.

Additional capital expenditure for all service center investments
(France, Germany, Poland, India and China) of EUR 60 million has been
approved as a result of changes in scope and increasing costs (mainly
related to construction and equipment purchase). As a result, capital
expenditure for service center network expansion, excluding the
acquisition of the Italian distributor SoGePar, will total
approximately EUR 220 million.

The feasibility study on building a cold rolling mill in India has
been finalized. Outokumpu has decided not to proceed with the
investment at this point. Other options for strengthening Outokumpu's
presence in the growing Indian market are currently being explored.
Acquisitions and divestments

In April, Outokumpu signed an agreement to acquire the SoGePar Group,
an Italian distributor of stainless steel from the Borromeo family,
its current owners. Outokumpu will pay EUR 215 million in cash and
take on company debt totaling some EUR 120 million. Details on the
transaction were filed with the EU Commission on June 19, 2008 and
the acquisition is expected to be closed by the end of July 2008. The
total consideration is subject to final review once the closing
balance sheet, expected by the end of the third quarter, has been
approved.

SoGePar operates stainless steel service centers in Castelleone in
Italy and in Rotherham in the UK. SoGePar also has stock operations
in Italy, the UK, Belgium, Finland, France and Ireland, as well as a
commercial office in Germany and a representative office in Turkey.
Sales by the SoGePar Group in 2007 totaled EUR 560 million, with an
operating profit of EUR 44 million and deliveries totaling 134 000
tons.

In June, Outokumpu signed an agreement to acquire the operations of
Avesta Klippcenter AB in Avesta, Sweden. Transfer of ownership in
connection with this transaction took place on July 1, 2008.

Discontinued operations
In April, Outokumpu signed an agreement whereby the Group's remaining
copper tube assets were sold to Cupori Group Oy. This transaction was
closed on June 3, 2008 and Outokumpu received EUR 56 million as
consideration for the sale. A capital loss of EUR 66 million was
booked on the transaction. Both these figures are subject to final
review, once the closing balance sheet, expected by the end of the
third quarter of 2008, has been approved. Assets divested comprise
the copper plumbing installation and industrial tube manufacturing
companies in Pori (Finland), Zaratamo (Spain), Västerås (Sweden) and
Liège (Belgium), as well as the copper tube sales companies in
France, Germany and Italy. In 2007, these businesses generated sales
totaling EUR 510 million, a net loss of EUR 5 million and employed
730 personnel.
Risks and uncertainties

Outokumpu's operations are conducted in accordance with the
Board-approved risk management policy which defines the objectives,
approaches and areas of responsibility in risk management. Outokumpu
categorizes risks as strategic/business, operational or financial.
Risks and uncertainties may, if materialized, substantially impact on
earnings and cash flows in the current year. Key risks are being
assessed regularly.

Important strategic and business risks include overcapacity in
stainless steel production, product substitution and the cyclical
nature of stainless steel demand. New stainless steel production
capacity is being built in China and this may lead to overcapacity in
cold rolled stainless production. To mitigate risks related to the
cyclical nature of the stainless steel business and the risk of
product substitution, Outokumpu is aiming to increase sales to
end-users and to widen the Group's product offering. The strategy is
supported by the Group's new organization, which ensures that
customers are served in an optimal way.

Operational risks arise as a consequence of inadequate or failed
internal processes, employee actions, systems or other events such as
natural catastrophes, and misconduct or crime.

Property damage and business interruption caused by fire at some
major site is a key risk concern for the Group. Outokumpu has
systematic fire and security audit programs in place and part of the
hazard risk is covered by insurances.

Outokumpu has a number of investment and change projects underway and
failures or delays in these projects may negatively impact strategy
implementation and achievement of financial targets. Outokumpu
manages these risks by having dedicated resources for overall project
support and for monitoring the whole project portfolio. During the
second quarter, project management and support personnel have been
strengthened in order to meet the challenges and risks with the
ongoing projects.

Financial risks include exposure to market prices, the ability to
maintain adequate liquidity and exposure to the risk of default. The
most important financial market risks for Outokumpu include
variations in the price of nickel, variations in the exchange rate
between the Swedish krona and the euro, and the value of the US
dollar. Outokumpu also has significant exposure to equity and loan
security prices. Part of the Group's market risk is mitigated through
the use of financial derivative contracts. Liquidity and refinancing
risk are taken into account in capital management decisions. It is
Outokumpu's aim to mitigate significant part of credit risk with
insurances and other arrangements.

Outokumpu has continued to monitor the turbulence in global financial
markets. Management's assessment is that the current market situation
is not likely to impose significant restrictions on implementation of
the Group's current decisions and plans. The increases in credit
margins have not had any major impact on Outokumpu's funding costs.

In the second quarter, Outokumpu completed an assessment of the
principles and processes related to nickel price risk management.
Based on this analysis, some changes will be implemented during this
year, one of the key objectives being reduced variations in the
Group's operating profit.

Environment, health and safety

In the European Union, the carbon dioxide allowances allocated to
Outokumpu's installations in Sweden and Finland for the Kyoto-period
2008-2012, are estimated as being sufficient for the Group's planned
production. Actions have been taken to apply for allowances to also
cover the expansion of ferrochrome production in Tornio.
Emissions to air and discharges to water in the review period
remained mostly within permitted limits and the breaches that
occurred were temporary, were identified quickly and caused only
minimal environmental impact. Outokumpu is not a party in any
significant juridical or administrative proceeding concerning
environmental issues, nor is it aware of any environmental risks that
could have a material adverse effect on the Group's financial
position.

Because of the Group's new investment projects, several applications
for environmental permits have been submitted mostly in Finland and
Sweden.

Environmental and  energy-saving targets for the Group's Corporate
Responsibility theme year are: for energy saving: a 2% reduction in
energy consumed per ton of processed steel; and for materials
efficiency, a 10% reduction in land fill waste per ton of processed
steel. A review of progress is expected to take place in August. Some
units have already reported excellent progress in relation to the
established targets.

Occupational safety is a major focus area within the Group. In
I-II/2008, the lost-time injury rate (i.e. lost-time accidents per
million working hours) was 10 (I-II/2007: 10). The rate for the whole
year of 2008 is still behind the target, which is less than 8 in
2008. In 2009, the target is less than five.
Personnel
Outokumpu's continuing operations employed an average of 8 362 people
during January-June 2008 (I-II/2007: 8 285) and there were 8 884
employees at the end of June (June 30, 2007: 8 783). These figures
include some 800 summer trainees employed in the Group's units.
Class actions regarding the sold fabricated copper products business

The fabricated copper products business sold in 2005, comprised among
others Outokumpu Copper (USA), Inc. This company has been served with
several complaints in cases filed in federal district courts and
state courts in the US by various plaintiffs. The complaints allege
claims and damages under US antitrust laws and purport to be class
actions on behalf of all direct and indirect purchasers of copper
plumbing tubes and ACR tubes in the US. Except for one individual ACR
Tube claim, all these class actions and claims have been now ended
and the latest dismissals in Outokumpu's favor remain final.
Outokumpu believes that the allegations in the remaining case are
groundless and will defend itself in any such proceeding. In
connection with the transaction to sell the fabricated copper
products business to Nordic Capital, Outokumpu has agreed to
indemnify and hold harmless Nordic Capital with respect to these
class actions.

Customs investigation of exports to Russia by Outokumpu Tornio Works

In March 2007, Finnish Customs authorities initiated a criminal
investigation into the Group's Tornio Works' export practices to
Russia. The preliminary investigation is connected with another
preliminary investigation concerning a forwarding agency based in
South-eastern Finland. It is suspected that defective and/or forged
invoices have been prepared at the forwarding agency as regards
export of stainless steel to Russia. The preliminary investigation is
focusing on possible complicity by Outokumpu Stainless Oy in the
preparation of defective and/or forged invoices by the forwarding
agency in question. The investigation is expected to last until the
autumn 2008. Directly after the Finnish Customs authorities started
their investigations, Outokumpu initiated its own investigation into
the trade practices connected with stainless steel exports from
Tornio to Russia. In June 2007, after carrying out its investigation,
the leading Finnish law firm Roschier Attorneys Ltd., concluded that
it had not found evidence that any employees of Tornio Works or the
Company had committed any of the crimes alleged by the Finnish
Customs.
Organizational changes and appointments
Outokumpu has re-aligned its organization using an integrated model,
which is designed to serve the Group's customers in an optimal way.
The new organizational structure became fully operational on April 1,
2008.
Jamie Allan was appointed Executive Vice President - Supply Chain
Management and a member of Outokumpu's Group Executive Committee with
effect of January 1, 2008.
Annual General Meeting

The Annual General Meeting (AGM) on March 27, 2008 approved a
dividend of EUR 1.20 per share for 2007. Dividends totaling EUR 216
million were paid on April 8, 2008.

The AGM also authorized the Board of Directors to decide to
repurchase the Company's own shares as follows the maximum number of
shares to be repurchased is 18 000 000, currently representing 9.93%
of the Company's total number of registered shares. Based on earlier
authorizations, the Company currently holds 1 218 603 of its own
shares. The AGM authorized the Board of Directors to decide to issue
shares and grant special rights entitling to shares. The maximum
number of new shares to be issued through the share issue and/or by
granting special rights entitling to shares is 18 000 000, and, in
addition, the maximum number of treasury shares to be transferred is
18 000 000. The authorization includes the right to resolve upon a
directed share issue. These authorizations are valid until the next
Annual General Meeting, however no longer than May 31, 2009. To date
the authorizations have not been used.

The AGM decided on the number of the Board members, including the
Chairman and Vice Chairman, to be eight. Evert Henkes, Ole Johansson,
Victoire de Margerie, Anna Nilsson-Ehle, Leo Oksanen and Leena
Saarinen were re-elected as members to the Board of Directors, and
Jarmo Kilpelä and Anssi Soila were elected as new members. The Annual
General Meeting elected Ole Johansson as Chairman and Anssi Soila as
Vice Chairman of the Board. The AGM also resolved to form a
Shareholders' Nomination Committee to prepare proposals on the
composition and remuneration of the Board of Directors for
presentation to the next AGM.

KPMG Oy Ab, Authorized Public Accountants, was re-elected as the
Company's auditor for the term ending at the close of the next AGM.

At its first meeting, the Board of Directors of Outokumpu appointed
two permanent committees consisting of Board members. Leena Saarinen
(Chairman), Jarmo Kilpelä, Victoire de Margerie and Anssi Soila were
elected as members of the Board Audit Committee. Ole Johansson
(Chairman), Evert Henkes and Anna Nilsson-Ehle were elected as
members of the Board Nomination and Compensation Committee.
Shares and shareholders
According to the Nordic Central Securities Depository, Outokumpu's
shareholders by group at the end of June 2008 were the Finnish State
(31.1%), foreign investors (45.1%), Finnish public sector
institutions (13.0%), Finnish private households (6.1%), Finnish
financial and insurance institutions (1.8%), Finnish corporations
(1.5%) and Finnish non-profit organizations (1.4%). The list of
largest shareholders is updated daily on Outokumpu's internet pages
www.outokumpu.com.

At the end of June, Outokumpu's closing share price was EUR 22.25.
The average share price during I-II/2008 was EUR 25.86 (I-II/2007:
EUR 27.14). At the end of June, the market capitalization of
Outokumpu Oyj shares totaled EUR 4 010 million (June 30, 2007: EUR 4
531 million). During the first half of 2008, 260.6 (I-II/2007: 253.8)
million Outokumpu shares were traded on the Nasdaq OMX Nordic
Exchange Helsinki. At the end of June, Outokumpu's fully paid share
capital totaled EUR 308.4 million and consisted of 181 440 810
shares. The average number of shares outstanding during I-II/2008 was
180 141 997.

Events after the review period

In July, Outokumpu signed a deal with Vattenfall relating to
electricity deliveries in Finland and Sweden totaling some fifteen
terawatt hours (TWh) over a ten-year period. In addition to these
extensive deliveries of electrical power, Vattenfall and Outokumpu
also agreed on electricity portfolio management services to be
provided by Vattenfall, as well as on co-operation to achieve
improved efficiency in the use of energy.
Outokumpu is currently expanding its stainless steel operations in
Finland and Sweden and this has generated a need for additional
electricity supply. This deal with Vattenfall covers an important
share of the Group's electricity needs until the possible Fennovoima
nuclear project will start delivering.

Short term outlook

Underlying demand for stainless steel from most end-use segments is
stable. As a result of the increasing uncertainty related to the
global economic turmoil, some weakness is evident in consumer-driven
segments such as white goods and construction. Demand from
investment-driven segments continue generally healthy but some
projects have been postponed because of the economic uncertainties.

Distributors are currently postponing their purchases because of the
decline in the nickel price and the holiday period in Europe.
Inventory levels for standard grades by distributors are at normal
levels or somewhat higher. Outokumpu is now selling standard grades
for deliveries in August and September.

The slowdown of demand during the holiday season and annual
maintenance breaks at the Group's mills as well as the postponement
of purchases by distributors will clearly reduce stainless delivery
volumes for the third quarter compared to the second quarter.

The current market conditions suggest that there is price pressure up
to EUR 100-150/ton for the average base price of the German 2mm cold
rolled 304 stainless steel sheet in the third quarter compared to the
second quarter.

Outokumpu's operating profit for the third quarter of 2008 is
expected to be negative including some EUR 100 million of
nickel-related inventory losses at current nickel prices. Underlying
operational result is expected to be slightly positive depending on
delivery volumes.

In Espoo, July 24, 2008

Board of Directors


CONSOLIDATED FINANCIAL
STATEMENTS (unaudited)

Condensed income statement
                                  Jan-   Jan- April- April-   Jan-
                                  June   June   June   June    Dec
EUR million                       2008   2007   2008   2007   2007
Continuing operations:
Sales                            3 238  4 221  1 549  2 092  6 913
Other operating income               2     49      1     40     82
Costs and expenses              -2 956 -3 431 -1 373 -1 717 -6 364
Other operating expenses           -11     -9     -4     -9    -43
Operating profit                   274    830    174    406    589

Share of results in
associated companies                 1      7      1      4      4
Financial income and expenses
  Interest income                   10     12      5      7     25
  Interest expenses                -34    -43    -18    -22    -82
  Market price gains and losses     -2      2      5      4      0
  Other financial income            11    263      1    254    268
  Other financial expenses         -14     -3     -1     -1     -5
Profit before taxes                247  1 068    166    652    798

Income taxes                       -56   -205    -36   -100   -138
Net profit for the period
from continuing operations         191    864    130    553    660

Discontinued operations:
Net profit for the period
from discontinued operations       -72      9    -74     12    -18

Net profit for the period          119    872     56    565    641

Attributable to:
Equity holders of the Company      119    868     56    563    638
Minority interest                    -      4      -      2      4

Earnings per share
for profit attributable
to the equity
holders of the Company:
Earnings per share, EUR           0.66   4.80   0.31   3.11   3.52
Diluted earnings per share, EUR   0.66   4.77   0.31   3.09   3.50

Earnings per share from
continuing operations
attributable to the equity
holders of the Company:
Earnings per share, EUR           1.06   4.75   0.72   3.04   3.63

Earnings per share from
discontinued operations
attributable to the equity
holders of the Company:
Earnings per share, EUR          -0.40   0.05  -0.41   0.07  -0.10



Condensed balance sheet
                              June 30 June 30 Dec 31
EUR million                      2008    2007   2007
ASSETS
Non-current assets
Intangible assets                 469     485    475
Property, plant and equipment   1 971   2 010  1 980
Non-current financial assets
  Interest-bearing                454     457    453
  Non interest-bearing             80      82     77
                                2 974   3 033  2 986
Current assets
Inventories                     1 605   2 298  1 630
Current financial assets
  Interest-bearing                 63      62     50
  Non interest-bearing          1 146   1 431    975
Cash and cash equivalents          77      82     86
                                2 892   3 873  2 740

Assets held for sale               30     239    184

Total assets                    5 895   7 146  5 910

EQUITY AND LIABILITIES
Equity
Equity attributable to the
equity holders of the Company   3 227   3 634  3 337
Minority interest                   -       0      -
                                3 227   3 634  3 337
Non-current liabilities
Interest-bearing                  988   1 222  1 046
Non interest-bearing              338     350    337
                                1 327   1 572  1 382
Current liabilities
Interest-bearing                  565     668    464
Non interest-bearing              767   1 203    675
                                1 332   1 871  1 139

Liabilities related to
assets held for sale                9      68     52

Total equity and liabilities    5 895   7 146  5 910



Consolidated
statement
of changes in equity
                      Attributable to the equity holders of the
                      Company
                         Share Unregister-    Share    Other     Fair
                                                                value
                       capital    ed share  premium reserves reserves
EUR million                        capital     fund
Equity on December
31, 2006                   308           0      701       11      144
Cash flow hedges             -           -        -        -        1
Fair value changes on
available-for-sale
financial assets             -           -        -        -       12
Available-for-sale
financial assets
recognized through
P&L                          -           -        -        -      -99
Net investment hedges        -           -        -        -        -
Change in translation
differences                  -           -        -        -        -
Items recognised
directly in equity           -           -        -        -      -85
Net profit for the
period                       -           -        -        -        -
Total recognised
income and expenses          -           -        -        -      -85
Transfers within
equity                       0          -0        -        -        -
Dividends                    -           -        -        -        -
Shares subscribed
with options                 0           -        0        -        -
Management stock
option program:
value of received
services                     -           -        -        -        -
Acquisition of
minority in OSTP             -           -        -        -        -
Equity on June 30,
2007                       308           -      701       11       59

Equity on December
31, 2007                   308           -      701       16       57
Cash flow hedges             -           -        -        -       -0
Fair value changes on
available-for-sale
financial assets             -           -        -        -        9
Available-for-sale
financial assets
recognized through
P&L                          -           -        -        -        5
Net investment hedges        -           -        -        -        -
Change in translation
differences                  -           -        -        -       -0
Items recognised
directly in equity           -           -        -        -       13
Net profit for the
period                       -           -        -        -        -
Total recognised
income and expenses          -           -        -        -       13
Dividends                    -           -        -        -        -
Shares subscribed
with options                 0           -        0        -        -
Management stock
option program:
value of received
services                     -           -        -        -        -
Equity on June 30,
2008                       308           -      702       16       70


                      Attributable to the equity holders of the
                      Company
                      Treasury  Cumulative Retained Minority    Total
                        shares translation earnings interest   equity
EUR million                    differences
Equity on December
31, 2006                    -2         -35    1 927       17    3 071
Cash flow hedges             -           -        -        -        1
Fair value changes on
available-for-sale
financial assets             -           -        -        -       12
Available-for-sale
financial assets
recognized through
P&L                          -           -        -        -      -99
Net investment hedges        -           2        -        -        2
Change in translation
differences                  -          -8        -        0       -8
Items recognised
directly in equity           -          -6        -        0      -91
Net profit for the
period                       -           -      868        4      872
Total recognised
income and expenses          -          -6      868        4      781
Tranfers within
equity                       -           -        -        -        -
Dividends                    -           -     -199        -     -199
Shares subscribed
with options                 -           -        -        -        0
Management stock
option program:
value of received
services                     -           -        2        -        2
Acquisition of
minority in OSTP             -           -        -      -21      -21
Equity on June 30,
2007                        -2         -41    2 598        0    3 634

Equity on December
31, 2007                   -27         -82    2 364        -    3 337
Cash flow hedges             -           -        -        -       -0
Fair value changes on
available-for-sale
financial assets             -           -        -        -        9
Available-for-sale
financial assets
recognized through
P&L                          -           -        -        -        5
Net investment hedges        -           0        -        -        0
Change in translation
differences                  -         -29        -        -      -30
Items recognised
directly in equity           -         -29        -        -      -16
Net profit for the
period                       -           -      119        -      119
Total recognised
income and expenses          -         -29      119        -      103
Dividends                    -           -     -216        -     -216
Shares subscribed
with options                 -           -        -        -        0
Management stock
option program:
value of received
services                     -           -        2        -        2
Equity on June 30,
2008                       -27        -111    2 269        -    3 227



Condensed statement of cash flows
                                            Jan-June Jan-June Jan-Dec
EUR million                                     2008     2007    2007
Net profit for the period                        119      872     641
Adjustments
  Depreciation and amortization                  100      101     204
  Impairments                                     17        2       1
  Loss on the sale of copper tube business        66        -       -
  Gain on the sale
  of Outotec shares                                -     -142    -142
  Gain on the Talvivaara
  transaction                                      -     -110    -110
  Other adjustments                               80      220     199
Change in working capital                        -94     -565     181
Dividends received                                11       11      13
Interests received                                 3        5      10
Interests paid                                   -38      -44     -83
Income taxes paid                                -54     -134    -239
Net cash from
operating activities                             209      217     676
Purchases of assets                             -106      -60    -163
Purchase of Talvivaara shares                      -      -32     -32
Acquisition of the minority in OSTP                -      -22     -22
Proceeds from the sale of copper tube
business                                          49        -       -
Proceeds from the sale
of subsidiaries                                    -        1       1
Proceeds from the sale
of other assets                                    3        2      15
Net cash from other
investing activities                              -0        2       4
Net cash from
investing activities                             -54     -109    -197
Cash flow before
financing activities                             155      108     479
Purchase of treasury shares                        -        -     -25
Borrowings of long-term debt                       -      150     151
Repayment of long-term debt                     -145     -267    -388
Change in current debt                           200       48    -180
Dividends paid                                  -216     -199    -199
Proceeds from the sale of Outotec shares           -      158     158
Proceeds from the sale
of other financial assets                          0        -       6
Other financing cash flow                         -2        0       1
Net cash from
financing activities                            -163     -110    -477
Net change in cash
and cash equivalents                              -7       -2       2

Cash and cash equivalents at
the beginning of the period                       86       85      85
Foreign exchange rate effect                      -1       -0      -1
Net change in cash
and cash equivalents                              -7       -2       2
Cash and cash equivalents
at the end of the period                          77       82      86


Key figures
                                            Jan-June Jan-June Jan-Dec
EUR million                                     2008     2007    2007
Operating profit margin, %                       8.4     19.7     8.5
Return on capital employed, %                   13.2     36.4    13.9
Return on equity, %                              7.2     52.0    20.0
Return on equity from
continuing operations, %                        11.6     51.5    20.6

Capital employed at end of period              4 166    4 753   4 125
Net interest-bearing
debt at end of period                            939    1 119     788
Equity-to-assets ratio
at end of period, %                             54.8     50.9    56.5
Debt-to-equity ratio
at end of period, %                             29.1     30.8    23.6

Earnings per share, EUR                         0.66     4.80    3.52
Earnings per share from
continuing operations, EUR                      1.06     4.75    3.63
Earnings per share from
discontinued operations, EUR                   -0.40     0.05   -0.10
Average number of shares
outstanding, in thousands 1)                 180 142  181 055 180 922
Fully diluted earnings
per share, EUR                                  0.66     4.77    3.50
Fully diluted average number
of shares, in thousands 1)                   181 167  182 117 181 920
Equity per share at end
of period, EUR                                 17.91    20.07   18.53
Number of shares outstanding
at end of period,
in thousands 1)                              180 222  181 082 180 103

Capital expenditure,
continuing operations                             97      101     190
Depreciation,
continuing operations                            100      101     204
Average personnel for the
period, continuing operations                  8 362    8 285   8 270

1) The number of own shares repurchased is excluded.


NOTES TO THE INCOME STATEMENT AND BALANCE SHEET

This interim financial report is prepared in accordance with IAS 34
(Interim Financial Reporting). Mainly the same accounting policies
and methods of computation have been followed in the interim
financial statements as in the annual financial statements for 2007.
Inventories are stated at the lower of cost or net realizable value.
Outokumpu changed its calculation method for the cost of inventories
from first-in, first-out (FIFO) method to weighted average method in
2008. Also, Outokumpu adopted amended standard IAS 23 Borrowing Costs
in 2008. These changes have not had any material impact on the
interim financial statements.

Use of estimates
The preparation of the financial statements in accordance with IFRS
requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities, as well as the disclosure
of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of income and expenses during
the reporting period. Accounting estimates are employed in the
financial statements to determine reported amounts, including the
realizability of certain assets, the useful lives of tangible and
intangible assets, income taxes, provisions, pension obligations,
impairment of goodwill and other items. Although these estimates are
based on management's best knowledge of current events and actions,
actual results may differ from the estimates.

Shares and share capital

The total number of Outokumpu Oyj shares was 181 440 810 and the
share capital amounted to EUR 308.4 million on June 30, 2008.
Outokumpu Oyj held 1 218 603 treasury shares on June 30, 2008. This
corresponded to 0.7% of the share capital and the total voting rights
of the Company on June 30, 2008.
The Annual General Meeting held in 2003 passed a resolution on a
stock option program for management (2003 option program). The stock
options have been allocated as part of the Group's incentive programs
to key personnel of Outokumpu. Trading with Outokumpu Oyj's stock
options 2003A has commenced on the Main List of the Nasdaq OMX Nordic
Exchange Helsinki as of September 1, 2006. On June 30, 2008 a total
of 107 425 Outokumpu Oyj shares had been subscribed for on the basis
of 2003A stock option program. An aggregate maximum of 551 877
Outokumpu Oyj shares can be subscribed for with the remaining 2003A
stock options. In accordance with the terms and conditions of the
option program, the dividend adjusted share price for a stock option
was EUR 7.25 on June 30, 2008. The share subscription period for the
2003A stock options is September 1, 2006 - March 1, 2009. Trading
with Outokumpu Oyj's stock options 2003B has commenced on the Main
List of the Nasdaq OMX Nordic Exchange Helsinki as of September 3,
2007. On June 30, 2008 a total of 82 830 Outokumpu Oyj shares had
been subscribed for on the basis of 2003B stock option program. An
aggregate maximum of 945 990 Outokumpu Oyj shares can be subscribed
for with the remaining 2003B stock options. In accordance with the
terms and conditions of the option program, the dividend adjusted
share price for a stock option was EUR 10.31 on June 30, 2008. The
share subscription period for the 2003B stock options is September 3,
2007 - March 1, 2010. The current amount that Outokumpu Oyj shares
could be subscribed for with the 2003C stock options is 102 500
shares. The subscription period for shares with stock option 2003C is
from September 1, 2008 to March 1, 2011. As a result of the share
subscriptions with the 2003 stock options, Outokumpu Oyj's share
capital may be increased by a maximum of EUR 2 720 624 and the number
of shares by a maximum of 1 600 367 shares. This corresponds to 0.9%
of the Company's shares and voting rights. Outokumpu's Board of
Directors confirmed on February 2, 2006 a share-based incentive
program for years 2006-2010 as part of the key employee incentive and
commitment system of the Company. If persons covered by the program
were to receive the number of shares in accordance with the maximum
reward, currently a total of 861 825 shares, their shareholding
obtained via the program would amount to 0.5% of the Company's shares
and voting rights.
The detailed information of the 2003 option program and of the
share-based incentive program for 2006-2010 can be found in the
annual report 2007.
Acquisitions
In June Outokumpu signed an agreement to acquire the operations of
Avesta Klippcenter AB in Avesta, Sweden. Avesta Klippcenter's main
business is to process stainless steel material from Outokumpu's
mills in Sweden for remelting in Avesta's melt shop. Through the
acquisition Outokumpu's raw material handling capacity will increase,
and it will secure competitive supply for the Avesta stainless steel
melt shop. The total consideration is some EUR 8 million. The
purchase price allocation is preliminary and is subject to
finalization of the fair valuation of the acquired assets. The
company's annual sales are some EUR 4.5 million and it has 17
employees. The closing date for the acquisition was July 1, 2008 and
the company will be consolidated in Specialty Stainless division from
the closing date onwards.

Non-current assets held for sale and discontinued operations
In April, Outokumpu signed an agreement whereby it sold its remaining
copper tube assets to Cupori Group Oy. The assets were classified as
discontinued operations. The transaction was closed on June 3, 2008.
Outokumpu received EUR 56 million as consideration of the sale. A
capital loss of EUR 66 million has been booked on the transaction.
Both of these figures are subject to final review when the closing
balance sheet, expected by the end of the third quarter, has been
approved.

The Assets sold comprise the copper plumbing installation and
industrial tube manufacturing companies in Pori in Finland, Zaratamo
in Spain, Västerås in Sweden and Liège in Belgium, as well as the
copper tube sales companies in France, Germany and Italy. In 2007,
these businesses generated sales of EUR 510 million with a net loss
of EUR 5 million with a number of personnel of 730.

The remaining part of Copper Tube and Brass business consists of
brass rod business, which produces brass rods for applications in the
construction, electrical and automotive industries. The brass rod
plant is located in Drünen in the Netherlands and the unit also has a
50% stake in a brass rod company in Gusum, Sweden. Outokumpu Brass
employs some 170 employees. The assets and liabilities of Outokumpu
Brass are presented as held for sale. Outokumpu intends to divest
also the brass rod business.


Specification of non-current
assets held for sale
and discontinued operations

Income statement
                                Jan-June Jan-June Jan-Dec
EUR million                         2008     2007    2007
Sales                                241      332     599
Expenses                            -240     -318    -607
Operating profit                       1       13      -8
Net financial items                   -2       -3      -6
Profit before taxes                   -1       10     -15
Taxes                                 -1       -1      -1
Profit after taxes                    -2        9     -15

Impairment loss recognized
on the fair valuation of
the Tube and Brass division's
assets and liabilities                -5       -1      -3
Loss on the sale of copper tube
business                             -66        -       -
Taxes                                  -        -       -
After-tax result from the
disposal and impairment loss         -72        9     -18

Minority interest                      -        -       -
Net profit for the period
from discontinued operations         -72        9     -18

Balance sheet
                                 June 30  June 30  Dec 31
EUR million                         2008     2007    2007
Assets
Intangible and tangible assets         2        6       6
Other non-current assets               3        3       4
Inventories                           14      117      91
Other current non
interest-bearing assets               11      113      83
                                      30      239     184
Liabilities
Provisions                             1        2       4
Other non-current non
interest-bearing liabilities           1        5       5
Trade payables                         7       47      32
Other current non
interest-bearing liabilities           0       15      11
                                       9       68      52

Cash flows
                                Jan-June Jan-June Jan-Dec
EUR million                         2008     2007    2007
Operating cash flows                  -9        3      18
Investing cash flows                 -12       -1      -3
Financing cash flows                  16       -5     -19
                                      -5       -4      -4



Major non-recurring items
in operating profit
                                      Jan-June Jan-June Jan-Dec
EUR million                               2008     2007    2007
Gain on the sale of
Hitura mine in Finland                       -       25      25
Thin Strip restructuring in the UK           -        -     -11
                                             -       25      14

Major non-recurring items in
financial income and expenses
                                      Jan-June Jan-June Jan-Dec
EUR million                               2008     2007    2007
Impairment of Belvedere shares             -12        -       -
Gain on the sale
of Outotec shares                            -      142     142
Gain on the Talvivaara transaction           -      110     110
                                           -12      252     252

Income taxes
                                      Jan-June Jan-June Jan-Dec
EUR million                               2008     2007    2007
Current taxes                              -51     -188    -107
Deferred taxes                              -5      -17     -31
                                           -56     -205    -138

Property, plant
and equipment
                                        Jan 1,   Jan 1,  Jan 1,
                                        2008 -   2007 -  2007 -
                                      June 30, June 30, Dec 31,
EUR million                               2008     2007    2007
Historical cost at the
beginning of the period                  3 984    4 009   4 009
Translation differences                    -28      -26     -76
Additions                                   97       47     137
Disposal of subsidiaries                     -      -20     -20
Disposals                                  -15       -2     -67
Reclassifications                           -2        0       0
Historical cost at
the end of the period                    4 036    4 007   3 984

Accumulated depreciation at
the beginning of the period             -2 004   -1 939  -1 939
Translation differences                     19       14      47
Disposal of subsidiaries                     -       19      19
Disposals                                   12        2      56
Reclassifications                            0        0      -0
Depreciation                               -93      -94    -190
Impairments                                  -        -       3
Accumulated depreciation at
the end of the period                   -2 065   -1 998  -2 004

Carrying value at
the end of the period                    1 971    2 010   1 980
Carrying value at the
beginning of the period                  1 980    2 069   2 069

Commitments
                                       June 30  June 30  Dec 31
EUR million                               2008     2007    2007
Mortgages and pledges
Mortgages on land                          121      132     122
Other pledges                                0        0       0

Guarantees
On behalf of subsidiaries
  For commercial commitments                52       88      41
On behalf of associated companies
  For financing                              5        5       5

Other commitments                           61       56      64

Minimum future lease
payments on
operating leases                            60       63      56

Group's major off-balance sheet investment commitments totaled
EUR 70 million on June 30, 2008 (Dec 31, 2007: EUR 37 million).

Related party tranasactions

Transactions and balances
with associated companies
                                       June 30  June 30  Dec 31
EUR million                               2008     2007    2007
Sales                                        0        0       0
Purchases                                   -5       -5      -9
Financial income and expenses                0        0       2

Loans and other receivables                  9        9       9
Trade and other receivables                  1        1       0



Fair values and nominal
amounts of
derivative instruments
                      June 30  June 30 June 30 Dec 31 June 30  Dec 31
                         2008     2008    2008   2007    2008    2007
                     Positive Negative     Net    Net
                         fair     fair    fair   fair Nominal Nominal
EUR million             value    value   value  value amounts amounts
Currency and
interest
rate derivatives
  Currency forwards        19       17       2      8   2 924   1 992
  Interest rate
swaps                      10        -      10     10     282     282
  Currency swaps            1        -       1      -      50       -
Currency options,
bought                      0        -       0      -     347       -
Currency options,
sold                        -        2      -2      -     199       -

                                                       Number  Number
                                                           of      of
                                                      shares, shares,
                                                      million million
Stock options
  Belvedere
Resources Ltd.              1        0       1      3     3.7     3.7

                                                         Tons    Tons
Metal derivatives
  Forward and
futures
  copper contracts          3        3      -0     -2  13 800  11 775
  Forward and
futures
  nickel contracts          1        4      -3      0   3 816   3 114
  Forward and
futures
  zinc contracts            0        0      -0     -0     375   1 100
  Forward
  molybdenum
contracts                   -        -       -     -0       -       5
  Nickel options,
sold                        6        -       6      0   6 930      24
  Nickel options,
bought                      -        1      -1      -   1 950       -

Emission allowance
derivatives                 -        0      -0      0 180 000  80 000

                                                          TWh     TWh
Electricity
derivatives                34       15      19     16     1.5     2.3
                           75       42      33     35



Segment information

General Stainless

EUR million             I/07 II/07 III/07 IV/07  2007
Sales                  1 700 1 670    879 1 073 5 321
of which Tornio Works  1 206 1 038    516   708 3 468

Operating profit         245   188   -224    11   220
of which Tornio Works    227   143   -195     3   178

Operating capital at
the end of period      3 047 3 007  2 789 2 607 2 607

Average personnel
for the period         3 506 3 794  3 807 3 549 3 682

Deliveries of main
products (1 000 tons)
Cold rolled              187   151     94   155   587
White hot strip           81    82     41    66   270
Semi-finished products   117   118     64    85   383
Total deliveries
of the division          386   350    198   305 1 240

EUR million             I/08 II/08
Sales                  1 304 1 222
of which Tornio Works    905   833

Operating profit          81   125
of which Tornio Works     67   114

Operating capital at
the end of period      2 722 2 671

Average personnel
for the period         3 578 4 000

Deliveries of main
products (1 000 tons)
Cold rolled              196   162
White hot strip          102    85
Semi-finished products   100   113
Total deliveries
of the division          398   359

Specialty Stainless

EUR million             I/07 II/07 III/07 IV/07  2007
Sales                  1 003 1 028    687   738 3 456

Operating profit         182   196    -51     9   337

Operating capital at
the end of period      1 668 1 871  1 657 1 513 1 513

Average personnel
for the period         4 146 4 188  4 185 4 107 4 135

Deliveries of main
products (1 000 tons)
Cold rolled               51    52     33    38   174
White hot strip           43    38     23    31   135
Quarto plate              41    43     30    38   151
Tubular products          20    17     12    15    63
Long products             16    15     11    11    52
Total deliveries
of the division          170   164    109   133   574

EUR million             I/08 II/08
Sales                    786   778

Operating profit          42    44

Operating capital at
the end of period      1 430 1 449

Average personnel
for the period         4 115 4 096

Deliveries of main
products (1 000 tons)
Cold rolled               46    44
White hot strip           45    40
Quarto plate              35    37
Tubular products          19    18
Long products             14    14
Total deliveries
of the division          161   153

Other operations

EUR million             I/07 II/07 III/07 IV/07  2007
Sales                     64    63     53    57   237

Operating profit           1    19      8    -6    21

Operating capital at
the end of period       -125   101    184   236   236

Average personnel
for the period           477   459    424   431   453

EUR million             I/08 II/08
Sales                     64    63

Operating profit         -20     4

Operating capital at
the end of period        -20   283

Average personnel
for the period           447   487



Income statement by quarter

EUR million                     I/07 II/07 III/07 IV/07   2007
Continuing operations:
Sales
General Stainless              1 700 1 670    879 1 073  5 321
of which intersegment sales      421   430    230   234  1 315
Specialty Stainless            1 003 1 028    687   738  3 456
of which intersegment sales      169   193    119   124    605
Other operations                  64    63     53    57    237
of which intersegment sales       48    45     43    45    181
Intra-group sales               -638  -669   -391  -403 -2 101
Total sales                    2 129 2 092  1 227 1 465  6 913

Operating profit
General Stainless                245   188   -224    11    220
Specialty Stainless              182   196    -51     9    337
Other operations                   1    19      8    -6     21
Intra-group items                 -4     2     11     2     11
Total operating profit           424   406   -256    15    589

Share of results
in associated companies            2     4     -2    -1      4
Financial income and expenses    -10   242    -19    -7    206
Profit before taxes              416   652   -277     7    798
Income taxes                    -105  -100     67    -0   -138
Net profit for the period
from continuing operations       311   553   -210     7    660

Net profit for the period
from discontinued
operations                        -4    12     -4   -23    -18
Net profit for the period        307   565   -214   -16    641

Attributable to:
Equity holders of the Company    305   563   -214   -16    638
Minority interest                  2     2     -0    -0      4

EUR million                     I/08 II/08
Continuing operations:
Sales
General Stainless              1 304 1 222
of which intersegment sales      284   337
Specialty Stainless              786   778
of which intersegment sales      124   120
Other operations                  64    63
of which intersegment sales       57    57
Intra-group sales               -465  -514
Total sales                    1 689 1 549

Operating profit
General Stainless                 81   125
Specialty Stainless               42    44
Other operations                 -20     4
Intra-group items                 -3     1
Total operating profit           100   174

Share of results
in associated companies            0     1
Financial income and expenses    -20    -8
Profit before taxes               80   166
Income taxes                     -19   -36
Net profit for the period
from continuing operations        61   130

Net profit for the period
from discontinued
operations                         2   -74
Net profit for the period         63    56

Attributable to:
Equity holders of the Company     63    56
Minority interest                  -     -

Major non-recurring
items in operating profit

EUR million                     I/07 II/07 III/07 IV/07   2007
Specialty Stainless
Thin Strip restructuring
in the UK                          -     -    -11     -    -11
Other operations
    Gain on sale of
Hitura mine in Finland             -    25      -     -     25
                                   -    25    -11     -     14

EUR million                     I/08 II/08
Specialty Stainless
Thin Strip restructuring
in the UK                          -     -
Other operations
    Gain on sale of
Hitura mine in Finland             -     -
                                   -     -

Major non-recurring items in
financial income and expenses

EUR million                     I/07 II/07 III/07 IV/07   2007
Impairment of Belvedere shares     -     -      -     -      -
Gain on the sale of
Outotec shares                     -   142      -     -    142
Gain on the Talvivaara
transaction                        -   110      -     -    110
                                   -   252      -     -    252

EUR million                     I/08 II/08
Impairment of Belvedere shares   -12     -
Gain on the sale of
Outotec shares                     -     -
Gain on the Talvivaara
transaction                        -     -
                                 -12     -



Key figures by quarter

EUR million                             I/07   II/07  III/07   IV/07
Operating profit margin, %              19.9    19.4   -20.9     1.0
Return on capital employed, %           38.8    35.5   -22.3     1.4
Return on equity, %                     39.3    66.2   -24.3    -2.0
Return on equity,
continuing operations, %                39.8    64.8   -23.9     0.8

Capital employed at end of period      4 377   4 753   4 421   4 125
Net interest-bearing
debt at end of period                  1 189   1 119   1 016     788
Equity-to-assets ratio
at end of period, %                     47.2    50.9    54.6    56.5
Debt-to-equity ratio
at end of period, %                     37.3    30.8    29.8    23.6

Earnings per share, EUR                 1.69    3.11   -1.19   -0.09
Earnings per share from
continuing operations, EUR              1.71    3.04   -1.17    0.04
Earnings per share from
discontinued operations, EUR           -0.02    0.07   -0.02   -0.13
Average number of shares
outstanding, in thousands 1)         181 067 181 082 181 084 180 680
Equity per share
at end of period, EUR                  17.51   20.07   18.81   18.53
Number of shares outstanding
at end of period, in thousands 1)    181 082 181 082 181 084 180 103

Capital expenditure,
continuing operations                     25      75      47      43
Depreciation, continuing operations       51      50      51      52
Average personnel for the period,
continuing operations                  8 129   8 441   8 416   8 086

EUR million                             I/08   II/08
Operating profit margin, %               5.9    11.2
Return on capital employed, %           10.0    17.2
Return on equity, %                      7.7     7.0
Return on equity,
continuing operations, %                 7.5    16.3

Capital employed at end of period      3 899   4 166
Net interest-bearing
debt at end of period                    737     939
Equity-to-assets ratio
at end of period, %                     53.2    54.8
Debt-to-equity ratio
at end of period, %                     23.3    29.1

Earnings per share, EUR                 0.35    0.31
Earnings per share from
continuing operations, EUR              0.34    0.72
Earnings per share from
discontinued operations, EUR            0.01   -0.41
Average number of shares
outstanding, in thousands 1)         180 112 180 172
Equity per share
at end of period, EUR                  17.56   17.91
Number of shares outstanding
at end of period, in thousands 1)    180 127 180 222

Capital expenditure,
continuing operations                     41      56
Depreciation, continuing operations       50      50
Average personnel for the period,
continuing operations                  8 140   8 583

1) The number of own shares repurchased is excluded.



Definitions of key
figures


                         Total equity + net interest-bearing
Capital employed       = debt

Operating capital      = Capital employed + net tax liability

Return on equity       = Net profit for the financial year      × 100
                         Total equity (average for the period)

Return on capital      = Operating profit                       × 100
employed (ROCE)          Capital employed (average for the period)


Net interest-            Total interest-bearing debt
bearing debt           = - total interest-bearing assets

Equity-to-assets ratio = Total equity                           × 100
                         Total assets - advances received

Debt-to-equity ratio   = Net interest-bearing debt              × 100
                         Total equity

                         Net profit for the financial year
Earnings per share     = attributable to the equity holders
                         Adjusted average number
                         of shares during the period

                         Equity attributable to
Equity per share       = the equity holders
                         Adjusted number of shares
                         at the end of the period